4 Things Your Not-for-Profit Needs to Know About Online Donors

July 24, 2017

New data from Target Analytics, a division of Blackbaud, reveals key insights into online and offline donors. The findings are based on analysis of online and offline giving data from sixteen large national not for profits in the United States during 2016 and represents more than 6.5 million donors. These organisations participate in a donorCentrics Internet Benchmarking Group.

The giving data examines demographic and donation data for donors that only gave online, donors that only gave offline, and donors that made both online and offline gifts in 2016. What emerges is a clearer picture about online givers and there is an opportunity to separate fact from fiction.

Here are 4 facts your organisation should know about online donors, according to the data:

1. They Are Younger

During 2016, 45% of donors giving only online were younger than 55 years old compared to just 21% of offline donors. By comparison, only 29% of online only donors were 65 or older while 58% of offline only donors are represented in these age brackets. Consider for a moment that according to Target Analytics, the average age of a U.S. donor in 2016 was 62 years old. What about Millennials? Approximately 14% of online only donors were Millennials compared to 6% of offline only donors in 2016. We also know from the data that donors giving online only gave more than their offline only counterparts at every age level.

This is not to say that “older” donors don’t give online. This is a shadow belief among many not for profits who believe their donors won’t make online donations. More than half of online givers are 55 years or older. 70% of donors that give online and offline are also 55 years or older. The good news from all of this is that online givers help to bring the average age of a not for profit’s donor base down, but it can still be a very viable channel for older donors too.

2. They Have Higher Incomes

The data analysis reveals that online only donors tend to have higher household incomes than offline only donors. Approximately 42% of online only donors had household incomes over $100,000 in 2016 compared to 28% of offline only donors. Once again, we need to take into consideration multi-channel donors. 35% of donors with household incomes above $100,000 made online and offline donations in 2016.

While it is true that online givers have higher incomes, it is important to distinguish income from assets. We know that a significant number of donors 65 years and older live on fixed incomes, but have higher asset levels than younger donors. This tends to skew income comparisons with older donors across giving channels. These older donors may have lower household incomes that influence giving from disposable income, but their assets play a larger role in planned and major giving.

3. They Are Less Loyal

Online givers are younger, have higher incomes, but they are less loyal than offline only donors. (Two out of three isn’t bad.) First-year donor retention rates for online only donors are significantly lower than those of offline only donors. Donors who were new in 2015 and made only offline gifts have higher first-year retention rates at every age group than online only donors. Even Millennials who gave offline only had dramatically higher first-year retention rate compared to their digital native counterparts.

The sharp drop in first-year retention rates in online only donors is something Target Analytics has observed for more than a decade now. It’s a trend that often has more questions than answers.

Are online only donors inherently less loyal or does it have more to do with the stewardship they receive compared to offline donors?

Do fragmented online giving experiences result in lower retention rates?

The visible difference in retention rates probably has more to do with not for profits pretending online donors are different than offline donors in the first place.

4. They Are Not Better Than Offline Donors

Not for profits need to be careful not to confuse the channel of engagement with the channel of the transaction. Online versus offline is a false choice. The reality is that a successful donor engagement strategy involves both online and offline giving. The ideal donor is engaged through a multi-channel approach.

Nearly seven years ago, I wrote that “Single Channel Communication is Dead” and yet many not for profits are still chasing online zombies. In 2010, first-year retention for multi-channel donors was 51% compared to 30% for offline and 22% for online. Since then, the retention rate of multi-channel donors has increased another 10%, while both online and offline have remained about the same. The best donors are those that give through both channels – not one or the other.

The demographics of online givers are very encouraging, but the retention rates should give everyone in the not for profit sector some pause. It’s an expensive and vicious cycle to acquire new online givers only to lose 70% to 80% of them in a year. A focus on donor engagement, stewardship, and donor retention should make use of multiple channels.

It has been nearly 20 years since the first online gifts began flowing to not for profit organisations. In that time, online giving has grown tremendously. But not for profits also need to consider that less than 10% of all giving happens online. The transition from offline to online is likely to be more glacial than tidal. Giving on mobile devices is certainly accelerating this transition. Armed with the right data, not for profits can make better decisions about both their online and offline donor engagement strategies.

MacLaughlin has been featured as a fundraising and not for profit expert in many mainstream publications, including The New York Times, The Washington Post, The Los Angeles Times, The Boston Globe, The Chronicle of Philanthropy, USA Today, The NonProfit Times, Bloomberg, and has appeared on NPR.

He is a frequent speaker at events including the Association of Fundraising Professionals (AFP), Association for Healthcare Philanthropy (AHP), American Marketing Association (AMA), Council for Advancement and Support of Education (CASE), Direct Marketing Fundraisers Association (DMFA), Giving Institute Summer Symposium, National Association of Independent School (NAIS), Nonprofit Technology Network (NTEN), Institute of Fundraising National Convention, Civil Society Conference, Resource Alliance’s Fundraising Online, and a keynote speaker at such events as the Crescendo Practical Planned Giving Conference.

Steve serves on the Nonprofit Technology Network (NTEN) Board of Directors and supports its focus on both the growth and professionalism of the not for profit technology field as well as building knowledge and information sharing capacity throughout the sector.